BOV Chairman John Cassar White has confirmed that the agreement with parliamentary secretary Michael Falzon, for his early retirement scheme, was indeed an adhoc agreement.
He was addressing the BOV AGM. He spoke of the history of the early retirement scheme, mentioning that they introduced it in 2001 and it was included in the collective agreement in 2005.
The Chairman explained that in the past, they have had employees who worked for Parastatal entities, and as such would work through secondment, however said that this was a unique case. He said that if in this case, secondment was used for Michael Falzon, it would result in a conflict of interest. As such they offered him early retirement. He said that if Michael Falzon returns back in the first five years, he would have to pay a substantial amount of the early retirement sum given back to the bank.
The Parliamentary Secretary had said, back in July, that he is unable to return to the bank after June 2018, and this was confirmed by the BOV Chairman in comments to this newsroom, who said that if "Dr Falzon decides to return to the Bank before the end of this legislature, he has to refund the major part of his retirement benefits. Moreover, Dr Falzon has only up to the end of this legislature to decide whether or not to return to the Bank".
The Chairman explained that there were certain parts of the 2005 collective agreement regarding early retirement that he did not agree with, such as once an employee reaches the age of 59, he could automatically retire early and be paid three year’s salary.
“In the last collective agreement, we kept the ability to offer early retirement, but the prerogative lies solely with the bank. Nobody can come and tell us to grant them early retirement like that”.
The Chairman also thanked CEO Charles Borg, whose term is up, for his work, however said that he will still work on certain projects for BOV.
He described the environment in which the bank was operating as one characterised by a subdued international economic scenario, persisting low interest rates and increased regulatory requirements.
He mentioned that since the beginning of the year, BOV has been supervised by the Joint Supervisory Team under the Single Supervisory Mechanism.
The focus for the bank, he said, is strengthening its capital base and more efficiently managing its capital risks.
The bank, he explained, plans to reduce the risk in certain business operations and regularly review its risk appetite framework.
He mentioned a case currently before the Italian Courts relating to a Trust. “The lawyers have said we have a strong case, but the decision will be up to the courts”. He said that the bank will eventually want to move out of some sectors, which indicates that Trusts could be one of them.
He said that there are certain areas which are high risk and are not compensated enough through income gained. He said the bank will look into how to move out of certain sectors without inconveniencing the people who already benefit from those services.
Competition is on the rise, he said, mentioning that until a few years ago the main competitor was a single big bank. “Today, through technology, it’s easy to offer bank services without having 40 or more branches, and this is a huge challenge”.
He mentioned the need to hire more IT professionals and that the bank is working on upgrading its IT systems. He also spoke of the need to keep diversifying its business.
The Chairman mentioned that €75 million subordinated bonds were recently released, and this was the first step to strengthening the bank’s capital. He said that more of this is expected in 2016.
Answering questions related to the La Valette Property Fund, he said that the only complaints left relate to those who signed an agreement with the bank and agreed to take 75c for each share as a full and final settlement. The bank, he said, sought legal advice and said that since this was a full and final settlement, the Directors would take a personal risk if they proposed to take shareholder funds to give further funds to those investors.
CEO Charles Borg expressed his satisfaction at the pre-tax profits of €117.9 million, a 13% increase over the previous year.
Key performance indicators, he said, were also satisfactory with a return on equity of 18.4%.
He explained that innovation remains the key drive within the Bank’s customer-centric vision. “The Bank set up a dedicated Consumer Finance Division which is enabling the bank to have a more driven focus on the financial requirements of its retail segment”.
He said that over €600 million were drawn in business related facilities across a broad spectrum of economic sectors.
During the question and answer period, one man spoke out and said that older shareholders are receiving too low a pay-out on their shares.
Earlier
John Cassar White has been confirmed as Bank of Valletta chairman at the bank’s annual general meeting that was held today.
The election of the board of directors was not held as there was exactly the same number of candidates to fill up the number of vacancies.
Alicia Agius Gatt, who had been named as a possible contender, pulled out of the race at the last minute. She was one of the directors who was found to be ‘unfit’ for re-election, along with George Portanier (who contested and is set to be made a director if approved)
The directors who made it to the board are Helga Barbara Ellul, James Grech, Mario Grima, Alfred Lupi, George Portanier, Taddeo Scerri, Gabrielle Simonetti and Joseph M. Zrinzo. BOV is now awaiting approval from the banking supervisors. This, he said, is part of new supervisory mechanisms put in place for all banks by the Joint Supervisory Team.